3rd Holds That There Is No Private Right Of Action Over Improper FICA Deductions

Umland v. Planco, ___F.3d___(3rd Cir. Sept. 9, 2008) is an important case. Employees were improperly classified as an independent contractor. As a result, they overpaid their FICA taxes because the employer did not pay its share. In this class action, the plaintiffs sought to bring a cause of action under FICA statute and state law. The FICA statute, however, does not provide a private cause of action and state law was preempted by the IRS Code which did contain procedures where plaintiffs coul obtain relief.

As the court stated:

We agree with PLANCO that permitting Umland’s suit
to proceed with respect to the 2000–03 damages she allegedly
experienced would interfere with the IRS’s administrative
scheme for handling such disputes. See IRS Form SS-8; see
also Treas. Reg. § 31.3121(d)-1 (defining employees for
purposes of FICA); IRS, Internal Revenue Manual, pt. 4, ch. 23,
§ 6 ( 2 0 0 3 ) , a v a i l a b l e a t
http://www.irs.gov/irm/part4/ch21s07.html

Mitchell H. Rubinstein